Performance and broadcast royalties (sound recording)

In much the same way that royalties are payable for the use of copyright-protected materials such as music and lyrics, they are also payable to the owners of the copyright in the sound recording. Radio stations, television networks and other users of music need to pay the owners of the copyright in the sound recording for the use of the sounds embodied in the master recording.

In fact, most users of music are required to pay both fees.

It can get quite expensive exploiting music written by others. It is a good thing that music is such a powerful force influencing what people buy, where they shop and even what kind of lifestyle they choose to have. Just remember that every time you hear music, it is being exploited for some purpose and the users must therefore compensate the copyright owners. Songwriters, performers and the owners of the sound recording must be able to profit considering the high risk and cost of making the recordings in the first place.

The owner of the copyright in the sound recording is generally the record company — remember, they paid for it, and have the right to collect income generated by the its use. This is a point of contention with many artists. The artist Prince, for example, was so horrified to learn that his old record company, Warner Bros, was making money from his master recordings that he went back into the studio and rerecorded many of his hits — the same as the original, note for note — so that he could own the sound recordings and license their uses.

Artists, however, should get paid a portion of the public performance and broadcast royalties generated by the use of their master recordings

The role of the PPCA

The record companies are, of course, busy being record companies rather than collection societies. The Phonographic Performance Company of Australia (PPCA) is a private company whose shareholders are the major record companies and whose members are Australia’s major and independent record companies. In order to become a member of the PPCA, you must be the owner of copyright in sound recordings or music videos in Australia. Anyone who owns these can and should be a member of the PPCA.

The PPCA collected $11.9 million in revenue in 2004, of which $8.9 million was distributed to its members.

Calculating performance and broadcast royalties (sound recordings)

The PPCA calculates its licence fees using a variety of methods. Visit the PPCA’s website at www.ppca.com.au for a detailed list of current fees.

Below are a few examples:

As with APRA, the PPCA are constantly reviewing and updating their licence fees, the figures below should only be used as a guide.

Jukeboxes: Annual fee of $97.90 per machine.

General licences: Annual fee of $107.80 to cover the use of protected sound recordings at:

Nightclubs, fixed discotheques and discotheque promoters: Where protected sound recordings are used as musical entertainment, which includes breaks in live performances, the fee is calculated at $0.0726 (i.e. 7.26 cents) per person per night of operation. The minimum annual fee is $125.40.

Concert venues: Where protected sound recordings are used as a means of entertaining patrons, including breaks in live performances, the fee is calculated at $2.64 per event (i.e. number of days/nights of operation) for each 1000 people (or part thereof, up to the next 1000) for the room or venue’s capacity. The minimum fee is $46.86.

Radio and television: Broadcasters pay a licence fee of about 0.025% of the station’s gross income.

Music in gym classes are just another example of this fee. A couple of years ago exactly the same thing happened with the PPCA increasing fees for night clubs.

You can be certain that as record company income continues to fall, the PPCA will continue to look for other areas where they can generate more revenue. The record companies successfully hide behind the PPCA even though much of the profits of the company eventually find there way back to the record companies coffers.

My prediction…in the next 12 months we will see another massive in increase in fees for a different type of recorded music user.